S.B. No. 1176




AN ACT
relating to systems and programs administered by the Employees Retirement System of Texas. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subchapter F, Chapter 411, Government Code, is amended by adding Section 411.1402 to read as follows: Sec. 411.1402. ACCESS TO CRIMINAL HISTORY RECORD INFORMATION: EMPLOYEES RETIREMENT SYSTEM OF TEXAS. (a) The Employees Retirement System of Texas is entitled to obtain from the department criminal history record information maintained by the department that relates to a person who is an applicant for employment with, or who is or has been employed by, the retirement system. (b) Criminal history record information obtained by the Employees Retirement System of Texas under Subsection (a) may be used only to evaluate an applicant for employment with, or a current or former employee of, the retirement system. (c) The Employees Retirement System of Texas may not release or disclose information obtained under Subsection (a) except on court order. (d) After the expiration of any probationary term of the person's employment or not later than the 180th day after the date of receipt of the information, whichever is later, the Employees Retirement System of Texas shall destroy all criminal history record information obtained under Subsection (a). SECTION 2. Subdivision (2-a), Section 609.001, Government Code, is amended to read as follows: (2-a) "Institution of higher education" means an institution of higher education as defined by Section 61.003, Education Code[, other than a public junior college]. SECTION 3. Section 811.001, Government Code, is amended by adding Subdivision (8-a) to read as follows: (8-a) "Good cause" means that a person's failure to act was not because of a lack of due diligence the exercise of which would have caused a reasonable person to take prompt and timely action. A failure to act based on ignorance of the law or facts reasonably discoverable through the exercise of due diligence does not constitute good cause. SECTION 4. Section 812.003, Government Code, is amended to read as follows: Sec. 812.003. MEMBERSHIP IN EMPLOYEE CLASS. (a) Except as provided by Subsections [Subsection] (b) and (d), membership in the employee class of the retirement system includes all employees and appointed officers of every department, commission, board, agency, or institution of the state except: (1) independent contractors and their employees performing work for the state; and (2) persons disqualified from membership under Section 812.201. (b) An office or employment that is included in the coverage of the Teacher Retirement System of Texas, the Judicial Retirement System of Texas Plan One, or the Judicial Retirement System of Texas Plan Two is not a position with a department, commission, board, agency, or institution of the state for purposes of this subtitle. (c) Membership in the employee class is mandatory for eligible persons. (d) Membership [For persons whose employment or office holding begins on or after September 1, 2005, membership in the employee class begins on the first day the person is employed or holds office. [(e) For persons whose employment or office holding begins before September 1, 2005, membership] in the employee class begins on the 91st day after the first day a person is employed or holds office. (e) [(f)] A person who is reemployed or who again holds office after withdrawing contributions under Subchapter B for previous service credited in the employee class begins membership in the employee class on the 91st day after the first day the person is reemployed or again holds office. (f) A [(g) Notwithstanding any other provision of law, a] member may establish service credit only as provided by Section 813.514 for service performed during the 90-day waiting period provided by Subsection (d) or (e) [or (f)]. [(h) Subsections (e), (f), and (g) and this subsection expire September 1, 2005.] SECTION 5. Subsection (a), Section 812.005, Government Code, is amended to read as follows: (a) A person's membership in the retirement system is terminated by: (1) death of the person; (2) retirement based on service credited in all classes of membership in which the person has service credit; or (3) withdrawal of all of the person's accumulated contributions[; or [(4) transfer of the person's accumulated contributions under Section 815.502(e)]. SECTION 6. Subchapter A, Chapter 812, Government Code, is amended by adding Section 812.006 to read as follows: Sec. 812.006. OPTIONAL MEMBERSHIP. (a) In this section, "qualified employee" means a person who: (1) has at least three years of service credit in the retirement system in the legislative branch that was accrued before June 18, 1993; (2) was employed by an institution of higher education, as defined by Section 61.003, Education Code, before December 31, 1998, and elected to participate in the optional retirement program under Chapter 830; and (3) is actively participating in the optional retirement program. (b) A qualified employee may make a one-time, irrevocable election in a manner provided by the retirement system to renew active participation in the system and cease participation in the optional retirement program. (c) An employee who makes an election under this section is not eligible to establish service credit in the retirement system for service performed while participating in the optional retirement program. (d) This section is contingent upon the receipt of a favorable Internal Revenue Service ruling addressing all tax issues. (e) An election authorized by this section must be made within 90 days of the Internal Revenue Service ruling. SECTION 7. Subsection (b), Section 813.102, Government Code, is amended to read as follows: (b) A member may reestablish credit by depositing with the retirement system in a lump sum the amount withdrawn from a membership class, plus interest computed on the basis of the state fiscal year at an annual rate of 10 [five] percent from the date of withdrawal to the date of redeposit. SECTION 8. Section 813.504, Government Code, is amended to read as follows: Sec. 813.504. ELIGIBILITY FOR SERVICE CREDIT PREVIOUSLY CANCELED. [(a)] A person may reestablish service credit previously canceled in the retirement system if[: [(1)] the person is a member of the employee class and at least six months have elapsed since the end of the month in which the cancellation became effective[; or [(2) the person is: [(A) a former member of the employee class; and [(B) a participant in the optional retirement program under Chapter 830]. SECTION 9. Subsection (a), Section 813.513, Government Code, is amended to read as follows: (a) An eligible member may establish not more than 36 [60] months of equivalent membership service credit, including law enforcement or custodial officer service, in either the elected class or the employee class. SECTION 10. Subsection (c), Section 813.514, Government Code, is amended to read as follows: (c) After a member makes the deposits required by this section, the retirement system shall grant the member one month of equivalent membership service credit for each month of credit approved. [A member may establish not more than three months of equivalent membership service credit under this section.] SECTION 11. Subchapter A, Chapter 814, Government Code, is amended by adding Section 814.011 to read as follows: Sec. 814.011. LUMP-SUM PAYMENTS IN LIEU OF ANNUITIES. The retirement system may elect to make a lump-sum payment to a retiree or beneficiary in lieu of annuity payments if the actuarial present value of the annuity at the time of retirement or death does not exceed $20,000. Payment of a lump sum under this section does not affect eligibility for any other program administered by the retirement system. SECTION 12. Section 814.202, Government Code, is amended by amending Subsections (a), (b), and (e) and adding Subsection (f) to read as follows: (a) A member who was contributing to the retirement system at the time the member became permanently disabled for the further performance of duty is eligible to retire for a nonoccupational disability if the member has at least: (1) 8 years of membership service credit in the elected class of membership; (2) 6 years of membership service credit in the elected class plus 2 years of military service credit established before January 1, 1978; or (3) 10 years of membership service credit in the employee class of membership. (b) A member who was contributing to the retirement system at the time the member became permanently incapacitated for the further performance of duty, who meets the requirements provided by Section 811.001(12), and who has service credit in either membership class is eligible to retire for an occupational disability regardless of age or amount of service credit. (e) A member otherwise eligible may not apply for or receive a nonoccupational disability annuity if the member is eligible for a service retirement annuity under Section 814.102 or 814.104(a)(2) or (b) [814.104]. (f) An application for a nonoccupational disability retirement may not be made after the second anniversary of the date the member ceased making contributions to the retirement system. SECTION 13. Section 814.203, Government Code, is amended to read as follows: Sec. 814.203. CERTIFICATION OF DISABILITY. As soon as practicable after an application for disability retirement is filed, the medical board shall evaluate the medical and other pertinent information regarding the member's application. If the medical board finds that the member is mentally or physically incapacitated for the further performance of duty, as supported by substantial, objective, medical evidence, and that the incapacity is likely to be permanent, the medical board shall issue a certification of disability and submit it to the executive director. A certification under this section is admissible in a contested case under Section 815.511 without proving the medical board as experts. SECTION 14. Section 814.206, Government Code, is amended by adding Subsection (f) to read as follows: (f) A standard nonoccupational disability retirement annuity under this section is reducible, under actuarial tables adopted by the board of trustees, for a member who retires before reaching an applicable age provided by Section 814.102 or 814.104. SECTION 15. Subsection (a), Section 814.301, Government Code, is amended to read as follows: (a) A contributing member who has at least 10 years of service credit in the elected or employee class of membership may select a death benefit plan for the payment, if the member dies while the member is eligible to select a plan, of a death benefit annuity to a person designated by the member. Death benefit annuities available for selection by a member described in this subsection are the optional annuities provided by Sections 814.108(c)(1) and (c)(4), payable as if the member had retired at the time of death. SECTION 16. Subsection (a), Section 814.302, Government Code, is amended to read as follows: (a) If a contributing member eligible to select a death benefit plan under Section 814.301 dies without having made a selection, or if a selection cannot be made effective, the member's designated beneficiary may select a plan in the same manner as if the member had made the selection. If there is no designated beneficiary, the personal representative of the decedent's estate may make the selection for the benefit of the decedent's heirs or devisees. In lieu of selecting a death benefit plan, the designated beneficiary or, if there is none, the personal representative of the decedent's estate, may elect to receive a refund of contributions and any applicable payment under Section 814.401. SECTION 17. Subsection (a), Section 815.103, Government Code, is amended to read as follows: (a) The board of trustees shall administer all assets of the retirement system. The board is the trustee of the system's assets. The board of trustees shall hold all retirement system assets in trust for the exclusive benefit of the members and annuitants of the system and administer all operations funded by trust assets for the same purpose. SECTION 18. Section 815.109, Government Code, is amended to read as follows: Sec. 815.109. CORRECTION OF ERRORS. If an error in the records of the retirement system results in a person receiving more or less money than the person is entitled to receive under this subtitle, the retirement system shall correct the error in accordance with Section 802.1024 and so far as practicable shall adjust future payments so that the actuarial equivalent of the benefit to which the person is entitled is paid. SECTION 19. Section 815.204, Government Code, is amended by adding Subsection (d) to read as follows: (d) The medical board is not subject to subpoena regarding findings it makes in assisting the executive director under this section, and its members may not be held liable for any opinions, conclusions, or recommendations made under this section. SECTION 20. Subsections (a), (c), and (d), Section 815.504, Government Code, are amended to read as follows: (a) The retirement system may photograph, microphotograph, or film any record in its possession or preserve the record through electronic document imaging. (c) A photograph, microphotograph, [or] film, or electronic document image of a record reproduced under Subsection (a) is equivalent to the original record for all purposes, including introduction as evidence in all courts and administrative agency proceedings. A [duly] certified or authenticated copy of such a record [photograph, microphotograph, or film] is admissible as evidence equally with the original [photograph, microphotograph, or film]. (d) The executive director or an authorized representative may certify the authenticity [of a photograph, microphotograph, or film] of a record reproduced under this section and shall charge a fee for the certified copy [photograph, microphotograph, or film] as provided by law. SECTION 21. Subchapter F, Chapter 815, Government Code, is amended by adding Sections 815.5111, 815.513, and 815.514 to read as follows: Sec. 815.5111. DILIGENT PROSECUTION OF SUIT. The plaintiff shall prosecute with reasonable diligence any suit brought under Section 815.511(f). If the plaintiff does not secure proper service of process or does not prosecute the suit within one year after it is filed, the court shall presume that the suit has been abandoned. The court shall dismiss the suit on a motion for dismissal made by or on behalf of the retirement system unless the plaintiff, after receiving appropriate notice, shows good cause for the delay. Sec. 815.513. EXCLUSIVE REMEDIES. The remedies provided under this chapter are the exclusive remedies available to a member, retiree, beneficiary, or alternate payee. Sec. 815.514. MAILINGS ON BEHALF OF NONPROFIT ASSOCIATION. The retirement system may make mailings on behalf of a nonprofit association of active or retired state employees described by Section 814.009, for purposes of association membership and research only, to annuitants identified in information contained in records that are in the custody of the system. The nonprofit association requesting a mailing shall pay the expenses of the mailing. SECTION 22. Subsection (b), Section 838.108, Government Code, is amended to read as follows: (b) A member is eligible to establish service credit under this section only for the purpose of becoming eligible to retire, or retiring, under Section 839.101(a)(3) [if the member has at least 120 months of actual membership service of the type of service that the member seeks to establish]. SECTION 23. Subsection (a), Section 840.001, Government Code, is amended to read as follows: (a) The board of trustees of the Employees Retirement System of Texas, as provided by Subchapter A of Chapter 815, is responsible for the general administration and operation of the retirement system. The board of trustees shall hold all retirement system assets in trust for the exclusive benefit of the members and annuitants of the system and administer all operations funded by trust assets for the same purpose. SECTION 24. Section 1551.003, Insurance Code, is amended by adding Subdivision (9-a) to read as follows: (9-a) "Good cause" means that a person's failure to act was not because of a lack of due diligence the exercise of which would have caused a reasonable person to take prompt and timely action. A failure to act based on ignorance of the law or facts reasonably discoverable through the exercise of due diligence does not constitute good cause. SECTION 25. Subsection (c), Section 1551.063, Insurance Code, is amended to read as follows: (c) To accomplish the purposes of this chapter, the [The] board of trustees may release the records to: (1) an administrator, carrier, agent, or attorney acting on behalf of the board; (2) another governmental entity having a legitimate need for the information to perform a function of the board of trustees; (3) an authorized [a] medical provider of the participant [to accomplish the purposes of this chapter]; or (4) a party in response to a subpoena issued under applicable law. SECTION 26. Subsection (e), Section 1551.101, Insurance Code, is amended to read as follows: (e) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if the individual receives compensation for service performed for an institution of higher education pursuant to a payroll certified by an institution of higher education or by an elected or appointed officer of this state and either: (1) is eligible to become [be] a member of the Teacher Retirement System of Texas after any waiting period provided by law before membership in that retirement system; or (2) is employed at least 20 hours a week and is not permitted to be a member of the Teacher Retirement System of Texas because the individual is employed by an institution of higher education only in a position that as a condition of employment requires the individual to be enrolled as a student in the institution in graduate-level courses. SECTION 27. Subchapter E, Chapter 1551, Insurance Code, is amended by adding Section 1551.220 to read as follows: Sec. 1551.220. BENEFICIARY CAUSING DEATH OF PARTICIPANT OR BENEFICIARY OF PARTICIPANT. (a) A benefit payable on the death of a participant or the beneficiary of a participant in the group benefits program may not be paid to a person convicted of causing that death but instead is payable as if the convicted person had predeceased the decedent. (b) The Employees Retirement System of Texas is not required to change the recipient of benefits under this section unless it receives actual notice of the conviction of a beneficiary. However, the retirement system may delay payment of a benefit payable on the death of a participant or beneficiary of a participant pending the results of a criminal investigation and of legal proceedings relating to the cause of death. (c) For the purposes of this section, a person has been convicted of causing the death of a participant or beneficiary of a participant if the person: (1) pleads guilty or nolo contendere to, or is found guilty by a court of, causing the death of the participant or beneficiary of a participant, regardless of whether sentence is imposed or probated; and (2) has no appeal of the conviction pending and the time provided for appeal has expired. SECTION 28. Subsection (a), Section 1551.259, Insurance Code, is amended to read as follows: (a) The amount of group life coverage and group accidental death and dismemberment coverage in force for a participant on the date the participant dies shall be paid, on the establishment of a valid claim, to a person surviving the death in the following order of precedence: (1) to the beneficiary designated by the participant in a signed and witnessed document mailed before the death of the participant [writing received before death by the employing state agency]; (2) if a beneficiary is not designated, to the spouse of the participant; (3) if Subdivisions (1) and (2) do not apply, to the children of the participant and descendants of the deceased children by representation; (4) if Subdivisions (1)-(3) do not apply, to the parents of the participant or the survivor of the parents; (5) if Subdivisions (1)-(4) do not apply, to the executor or administrator of the estate of the participant; or (6) if Subdivisions (1)-(5) do not apply, to other relatives of the participant entitled under applicable laws of the participant's domicile on the date of the participant's death. SECTION 29. Subchapter G, Chapter 1551, Insurance Code, is amended by adding Section 1551.3195 to read as follows: Sec. 1551.3195. AMOUNT OF CONTRIBUTION FOR ANNUITANTS WHO WERE PART-TIME EMPLOYEES. An annuitant who as an employee received the benefits of a state contribution under Section 1551.319(b) for coverage during any portion of the annuitant's last employment by a state agency is not eligible to receive more than the state contribution provided under Section 1551.319(b) unless the annuitant was designated by the annuitant's employer as a full-time employee during the three-consecutive-month period before retirement. SECTION 30. Subsection (d), Section 1551.351, Insurance Code, is amended to read as follows: (d) A person may appeal a determination made under Subsection (a) or (b) or Section 1551.352 only to the board of trustees. A proceeding under this subsection is a contested case under Chapter 2001, Government Code. This subchapter applies to an appeal to the board of trustees under this subsection. The appellant has the burden of proof on all issues, including issues in the nature of an affirmative defense. Any[, and any] sanction imposed is not stayed during an appeal under this subsection. [If a person fails to make a timely appeal, any sanction relates back to the date of the Employees Retirement System of Texas' determination.] An appeal of a decision of the board of trustees under this subsection is under the substantial evidence rule. SECTION 31. Subchapter H, Chapter 1551, Insurance Code, is amended by adding Section 1551.361 to read as follows: Sec. 1551.361. DILIGENT PROSECUTION OF SUIT. The plaintiff shall prosecute with reasonable diligence any suit brought under Section 1551.359. If the plaintiff does not secure proper service of process or does not prosecute the suit within one year after it is filed, the court shall presume that the suit has been abandoned. The court shall dismiss the suit on a motion for dismissal made on or behalf of the Employees Retirement System of Texas, unless the plaintiff, after receiving appropriate notice, shows good cause for the delay. SECTION 32. A retiree of the Employees Retirement System of Texas who at the time of retirement had at least 25 years of service credit in the retirement system and has served as the executive head of a legislative agency is eligible to make an election to retire as a member of the elected class of membership. The election must be made in writing to the Employees Retirement System of Texas before September 1, 2008. After the filing of such an election, the retirement system shall consider all the service credit established by the person who makes the election, including service credit established after the date the election is filed, as if it were performed as a member of the elected class of membership. SECTION 33. (a) An individual who is eligible for participation in the group benefits program under Subdivision (2), Section 1551.108, Insurance Code, on being first eligible to retire under Subdivision (1), Subsection (a), Section 814.104, Government Code, on or after March 31, 2008, is eligible for a contribution under Section 1551.310, Insurance Code. (b) The expiration of this section does not affect the eligibility of an individual for a contribution under Section 1551.310, Insurance Code, if the individual obtained coverage as described by Subsection (a) of this section before the expiration of this section. (c) This section takes effect March 1, 2008. This section expires August 31, 2008. SECTION 34. The Employees Retirement System of Texas shall recompute the annuities of all persons who retired or received a death benefit annuity from the Judicial Retirement System of Texas Plan One or the Judicial Retirement System of Texas Plan Two before January 1, 2002, as if the changes in law made by Chapter 1240, Acts of the 77th Legislature, Regular Session, 2001, to Subsection (b), Section 834.102, and Subsection (b), Section 839.102, Government Code, had been in effect on the date of the person's retirement or death. The first payment of any annuity increased under this section becomes payable with the first payment due on or after the effective date of this Act. SECTION 35. (a) The change in law made by this Act to Section 814.202, Government Code, applies only to a person who applies for a disability retirement annuity on or after the effective date of this Act. A person who applied for a disability retirement annuity before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and the former law is continued in effect for that purpose. (b) The changes in law made by this Act to Sections 814.301 and 814.302, Government Code, apply only to the selection of a death benefit plan that is made on or after the effective date of this Act. A person who selected a death benefit plan before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and the former law is continued in effect for that purpose. (c) The change in law made by this Act to Subsection (d), Section 1551.351, Insurance Code, applies only to an appeal filed on or after the effective date of this Act. An appeal filed under that subsection before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and the former law is continued in effect for that purpose. SECTION 36. The following provisions of the Government Code are repealed: (1) Section 813.103; (2) Section 813.507; (3) Section 813.508; (4) Section 813.510; (5) Section 814.1042; and (6) Subsection (d), Section 814.202. SECTION 37. (a) Except as provided by Subsections (b) and (c) of this section and as otherwise specifically provided by this Act, this Act takes effect September 1, 2005. (b) The changes in law made by this Act by the amendment of Subsection (a), Section 813.513, Government Code, the repeal of Section 814.1042, Government Code, and the enactment of Section 1551.3195, Insurance Code, by this Act, take effect January 1, 2006. (c) The change in law made by this Act to Subsection (b), Section 813.102, Government Code, takes effect September 1, 2006.
______________________________ ______________________________ President of the Senate Speaker of the House
I hereby certify that S.B. No. 1176 passed the Senate on May 4, 2005, by the following vote: Yeas 28, Nays 2; May 26, 2005, Senate refused to concur in House amendments and requested appointment of Conference Committee; May 27, 2005, House granted request of the Senate; May 29, 2005, Senate adopted Conference Committee Report by the following vote: Yeas 31, Nays 0. ______________________________ Secretary of the Senate I hereby certify that S.B. No. 1176 passed the House, with amendments, on May 23, 2005, by a non-record vote; May 27, 2005, House granted request of the Senate for appointment of Conference Committee; May 29, 2005, House adopted Conference Committee Report by a non-record vote. ______________________________ Chief Clerk of the House Approved: ______________________________ Date ______________________________ Governor